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Krispy Kreme Doughnuts Inc[9]. announced that it plans to enter into a supply chain distribution agreement with Sysco Corporation, a global provider in marketing and distributing a wide range of food and related products to the foodservice and food-away-from-home industry.

Under the proposed agreement, Sygma, a Sysco subsidiary, will distribute proprietary doughnut mixes and other ingredients and supplies to Krispy Kreme franchise and company shops in the eastern U.S. Sysco subsidiary IFG will be responsible for export of Krispy Kreme goods to the 20 foreign countries in which the company's international franchisees operate. The proposed agreement is not expected to have a material effect on the company's consolidated revenues or balance sheet.

Krispy Kreme outsourced distribution to shops in the western U.S. in 2008. The anticipated transition to Sysco in the eastern U.S. and internationally is expected to take place in the second and third quarters of calendar year 2011. Upon completion of the transition, the company will have outsourced all of its domestic and international distribution operations.

"Partnering with Sysco, a world-class logistics company with expertise in the restaurant industry, allows us to benefit from their buying power and the size and reach of their distribution network," says Brad Wall, senior vice president of supply chain and off-premises operations for Krispy Kreme. "By completing the outsourcing of delivery of doughnut mixes, ingredients, and supplies, we expect to further simplify our supply chain operations and add capabilities and services for our franchisees."

The company will continue to produce its proprietary doughnut mixes and concentrates at its mix manufacturing facility at Ivy Avenue in Winston-Salem, North Carolina. As part of the proposed transition that facility will supply mix products to Sysco, as well as to the company's West Coast distribution partner, for delivery to Krispy Kreme shops, and to contract mix manufacturers domestically and abroad.